Conventional vs High-Ratio

Conventional vs high-ratio mortgage: is 20% down actually worth it?

A high-ratio mortgage means you put down less than 20% and pay mandatory default insurance (CMHC, Sagen or Canada Guaranty). A conventional mortgage means 20% or more down and no insurance premium. The surprise for many buyers: insured high-ratio mortgages often get a lower interest rate — so the 'better' choice isn't always obvious.

High-ratio = under 20% downConventional = 20%+ downInsured rates often lowerPremium added to the mortgageRun both ways before deciding

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Written by the Mortgage Squad Advisors Editorial Team · Reviewed by the Principal Broker, FSRA #13737 · Updated June 2026

The short answer

If you have less than 20% down, you'll have a high-ratio mortgage and pay a one-time CMHC-type insurance premium (added to your mortgage) — but you also typically get the lowest interest rates, because the insurance protects the lender. If you have 20% or more, you have a conventional mortgage with no premium, but possibly a slightly higher rate. The real question isn't 'which is better' — it's whether stretching to 20% is worth it for you, versus buying sooner with less down. For many buyers, putting down exactly the minimum (or just under 20%) and getting the insured rate beats waiting years to save the full 20%.

At a glance

Which one is built for you?

High-ratio (insured)

Less than 20% down. Default insurance is mandatory (a one-time premium added to the mortgage), and the insured rate is usually the lowest available.

Best for

Buying sooner without waiting to save 20%
First-time buyers with a 5–19% down payment
Getting the lowest available interest rate
Putting savings toward other goals instead of a bigger down payment

Conventional (uninsured)

20% or more down. No insurance premium, more flexibility on property type and amortization — sometimes at a slightly higher rate than an insured mortgage.

Best for

You already have 20%+ saved comfortably
Buying a rental, a higher-value home, or 30-year amortization
Avoiding the insurance premium entirely
Refinances (which can't be insured)

Side by side

The full comparison

Factor	High-ratio (insured)	Conventional (uninsured)
Down payment	5% to 19.99%	20% or more
Default insurance	Mandatory (CMHC / Sagen / Canada Guaranty)	None
Premium cost	~2.8%–4.0% of the mortgage, added to the balance	$0
Interest rate	Usually the lowest (lender is protected)	Sometimes slightly higher
Max purchase price	Under $1.5M (insurance program limit)	No insurance-based limit
Amortization	Up to 25 yrs (30 for some first-time/new builds)	Up to 30 years
Property types	Owner-occupied, standard properties	Includes rentals and more property types
Refinances	Not eligible for insurance	Conventional only

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The 20% line — and what 'high-ratio' really means

In Canada, 20% down is the line that splits the two. Put down less than 20% and your mortgage is 'high-ratio' — the loan is a high ratio of the home's value — and federal rules require mortgage default insurance. That insurance comes from CMHC, Sagen, or Canada Guaranty, it's paid as a one-time premium (typically 2.8%–4.0% of the mortgage depending on your down payment), and the premium is almost always added to your mortgage balance rather than paid in cash. Our CMHC premium calculator shows the exact amount for any down payment.

Put down 20% or more and your mortgage is 'conventional' — no insurance, no premium. The minimum down payment to even be in the game: 5% on the first $500,000 of price, 10% on the portion above that, up to the insured program's price ceiling.

The counterintuitive part: insured rates are often lower

Here's what surprises buyers. You'd assume putting more money down always gets you a better deal — but on rate, the opposite is frequently true. Because a high-ratio mortgage is insured, the lender takes on almost no risk: if the borrower defaults, the insurer covers the loss. That protection lets lenders offer their lowest rates on insured mortgages.

A conventional (uninsured) mortgage isn't backed that way, so lenders price in a little more risk — which can mean a slightly higher rate, especially on refinances and rentals (which can't be insured at all). The result: a buyer with 19% down might get a lower rate than one with 20% down, even though they're paying an insurance premium. Whether the lower rate offsets the premium over your term is exactly the kind of math a broker runs both ways before you decide.

So should you stretch to 20%?

This is the decision that actually matters, and the answer is genuinely personal. Reaching 20% avoids the insurance premium (real money) and unlocks conventional flexibility — rentals, higher-value homes, 30-year amortizations, and the ability to refinance later. But getting there can take years of extra saving, during which home prices may rise faster than your down payment grows, and you're paying rent the whole time.

For many buyers — especially first-timers — buying sooner with the minimum down and an insured rate beats waiting. You build equity earlier, lock in today's price, and capture the lower insured rate; the premium is a one-time cost folded into the mortgage. For others with 20% already in hand, conventional is the clean choice. There's no universal winner — it depends on your timeline, your market, and what else you'd do with the cash. See how much down payment you really need.

What about the gap between 20% and the rules?

One more wrinkle worth knowing: there's a category between 'high-ratio insured' and a basic conventional mortgage. With 20%+ down some lenders use 'insurable' or back-end insured pricing — they insure the mortgage themselves at the portfolio level, which can earn you a lower rate than a fully uninsured deal even though you put 20% down. It depends on the price, amortization, and whether it's a purchase. The practical takeaway: the rate you're offered with 20% down can vary a lot by lender and structure, so this is precisely where shopping the whole market through a broker pays off. We'll show you the insured, insurable, and uninsured options side by side and let the numbers decide. Our down payment calculator helps you see each scenario.

Your situation

Which is right for you?

First-time buyer with 5–10% saved

Usually: High-ratio (insured)

Buy now, get the lowest insured rate, and fold the premium into the mortgage. Waiting years to reach 20% often costs more than the premium.

You have 20% comfortably and want a rental

Usually: Conventional

Insurance isn't available on rentals or refinances anyway, so conventional is the route — shop hard, since uninsured rates vary by lender.

You're at 18% and could reach 20% in a few months

Usually: Run both

Compare the insured rate at 18% vs a conventional/insurable rate at 20%, net of the premium. Sometimes the insured deal still wins — do the math.

Buying a home near $1.5M+

Usually: Conventional

Insured programs have a price ceiling, so higher-value homes need 20%+ down and a conventional mortgage by default.

FAQ

Common questions, answered.

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What is a high-ratio mortgage in Canada?

A high-ratio mortgage is one where your down payment is less than 20% of the purchase price, so the loan is a high ratio of the home's value. Federal rules require mortgage default insurance (from CMHC, Sagen, or Canada Guaranty) on these mortgages — a one-time premium of roughly 2.8%–4.0% of the loan, usually added to your balance. The trade-off: insured high-ratio mortgages typically get the lowest interest rates.

Why is an insured (high-ratio) mortgage rate often lower than conventional?

Because default insurance protects the lender against loss, an insured mortgage carries almost no risk for them — so they offer their best rates on it. A conventional (uninsured) mortgage isn't backed that way, so lenders sometimes price in slightly more risk. That's why a buyer with under 20% down can occasionally get a lower rate than one with 20% down, even after paying the premium.

Is it better to put down 20% or less?

It depends on your situation. Twenty percent avoids the insurance premium and unlocks conventional flexibility (rentals, higher-value homes, 30-year amortization, refinancing). But less than 20% lets you buy sooner, capture today's price, and get the lowest insured rate. For many buyers, buying now with the minimum down beats spending years saving to 20% while prices and rent climb. Run both ways before deciding.

How much is CMHC mortgage insurance?

The premium is roughly 2.8% to 4.0% of the mortgage amount, with a higher percentage for a smaller down payment (it's 4.0% at the 5% minimum and decreases as you approach 20%). It's a one-time cost, almost always added to your mortgage balance rather than paid upfront. Our CMHC calculator shows the exact figure for your down payment.

Can I get mortgage insurance on a refinance or rental?

No. Default insurance is only available on owner-occupied purchases with less than 20% down, below the program's price ceiling. Refinances and rental properties must be conventional, which is why they require at least 20% (often more) down and can carry slightly higher uninsured rates. Shopping multiple lenders matters most on these uninsured deals.

Keep exploring

CMHC premium calculator Down payment calculator First-time buyer CMHC insurance explained Affordability calculator Rental / investment Bank vs broker Down payment you need CMHC vs Sagen vs Canada Guaranty

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